Question 3a. Marsha has a salary of $500. He spends his entire budget on milk and cookies.The cost of a gallon of milk is $4 and the cost of a slice of cookies is $8.i.Construct Marsha's budget constraint (place) cookies on the y-axis.Suppose Marsha's salary rises by 50%. Also suppose that the price ofmilk and cookies each rise by 50%. Construct Marsha's new budgetii.constraint. What is the difference between the new and old budgetconstraints?Suppose that the price of cookies fell from $8 per cookie to $4. ConstructMarsha's new budget constraint. What is the difference between the newand old budget constraints.iii.b. Explain the relationship between the budget constraint and indifference curveat consumer optimum.

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which budget constraint panel in Figure below shows the combined effects of an increase in the price of oranges and a decrease in the price of apples? (e) (c) Oranges (a) (b) (d) Oranges Oranges Oranges Oranges Apples Apples Apples Apples Apples O panel a panel b panel c O panel e O none of the above
Suppose Lorenzo has a weekly budget of $48 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $4 per bottle, and peanut butter is priced at $6 per jar. If Lorenzo spends his entire $48 on ranch dressing, he can buy jars of peanut butter. buy Use the blue line (circle symbol) to plot Lorenzo's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of ranch dressing and peanut butter that are affordable for Lorenzo. Finally, place the black point (plus symbol) on the point on Lorenzo's budget constraint that corresponds to a scenario in which Lorenzo spends $24 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 24 22 20 18 2 0 + 0 2 4 12 14 16 18 20 22 bottles of ranch dressing. If he spends his entire $48 on peanut butter, he can 6 8 RANCH DRESSING (Bottles) O True False BC, ($48) O Affordable Region $24 on Each What does the slope of…
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Suppose Sam has a weekly budget of $48 to spend on juice and yogurt. Juice is priced at $4 per gallon, and yogurt is priced at $2 per container. gallons of juice. If he spends his entire $48 on yogurt, he can buy containers of If Sam spends his entire $48 on juice, he can buy yogurt. Use the blue line (circle symbol) to plot Sam's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of juice and yogurt that are affordable for Sam. Finally, place the black point (plus symbol) on the point on Sam's budget constraint that corresponds to a scenario in which Sam spends $24 on each good. Note: Dashed drop lines will automatically extend to both axes. ? 36 33 30 27 24 21 18 12 9 6 3 YOGURT (Containers) 0 0 + 3 6 9 12 15 18 21 JUICE (Gallons) 24 27 30 33 36 BC, ($48) 0 Affordable Region $24 on Each BC₂ ($60)

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